This blog covers financial, political and other topics the author gets the urge to write about. It does not provide personal financial, legal or other advice. Consider consulting a personal professional adviser before making any decisions. Copyright (c) 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017 by Leonard W. Wang. All rights reserved.

Monday, May 30, 2016

According to data collected by the U.S. Bureau of Labor Statistics, middle aged Americans are, on average, likely to have held 11 or 12 jobs by the age of 48. See http://www.bls.gov/nls/nlsfaqs.htm#anch4. The same group will have, on average, experienced 5 or 6 periods of unemployment by the age of 48. See http://www.bls.gov/nls/nlsfaqs.htm#anch42. Only about 10 percent of these workers will have had between 0 and 4 jobs by age 48. In other words, the long lasting, stable employment that we anticipate for adulthood is mostly a mirage. Few of us enjoy that kind of certainty. Indeed, it's fair to say just about all of us are temporary workers.

Of course, there are differences among workers. Some are considered full time, others part time. Some are permanent--either full time or part time--and others are temporary--either full time or part time. But the average American, with about 12 jobs by the age of 50, is realistically a temporary employee, just with better benefits if he or she is considered "permanent" and is working full time.

The impermanence of employment means fewer employees qualify for defined benefit pensions, even in the few jobs that still offer pensions. It also means that in the real world, workers have trouble building up their 401(k) and IRA accounts, because they're periodically hit with a spell of unemployment or have to rebuild benefits at a new employer. Many workers draw down their retirement accounts during episodes of joblessness. When they resume working, they have less time to build up their balances again. The only ways to counteract the temporariness of employment is to save furiously, or, if you're lucky enough to have a job offering a pension, to somehow stay put long enough to qualify for the pension, no matter how boring the job or overbearing the boss.

The wobbly, and sometimes turbulent, work lives of most people place this year's politics in sharp focus. The debates over Social Security, health insurance, trade policy, jobs programs and wage stagnation become all the more crucial when we consider that, in the end, we're almost all temporary workers. Proprosals that enhance stability for workers, like protecting and strengthening Social Security and Medicare will be popular. Measures like free trade agreements are likely to be losers.

But don't count on the government to bail you out. You're not a major financial institution, so assume that there will be no bailout for you. Save as much as you can--and then save some more.

Sunday, May 22, 2016

America's political Establishment is in big trouble. The Democratic Establishment candidate, Hillary Clinton, is steadily sinking in the polls compared to Donald Trump, and is now barely ahead of him, after many months of double digit leads, (see http://www.cnbc.com/2016/05/22/clintons-lead-over-trump-shrinks-to-3-points-new-nbc-newswsj-poll.html). Or else, she marginally trails Trump (see http://www.cnn.com/2016/05/22/politics/hillary-clinton-donald-trump-polls/index.html). At the same time, Bernie Sanders has a clear lead over Trump (see the NBC/WSJ poll). Because of the Clinton power politics machine, Hillary will almost surely be nominated. The Democratic Establishment apparently cannot believe that an insurgent like Trump could defeat Hillary. But an insurgent Democrat did beat her in 2008, and another insurgent Democrat has come darn close in 2016 (and isn't entirely out of the picture yet). Even worse, polls now indicate the insurgent on the Republican side may defeat her. If she loses, which seems a possibility, the Democratic Establishment will have undermined itself by supporting her.

The Republican Establishment is faced with a different, but also existential, challenge. Donald Trump isn't an Establishment guy. If he wins in November, the Republican Party's power structure will be recreated as he dictates. Trump skeptics and professional scoffers who have pooh-poohed his candidacy may hear Trump's memorable words, "You're fired." While many in the Republican power structure are now negotiating with Trump for some kind of entente, there are probably not a small number who won't support The Donald.

The political Establishment in both parties wins if Clinton wins. They both lose if Trump wins. With the polls moving toward a dead heat between Clinton and Trump, one wonders whether some establishment Republicans might not find quiet ways to support Hillary. With a Republican controlled House (and maybe Senate), she couldn't change things much--and that's what the Establishment wants. But if Trump wins, a lot of things could change (although many would say not in a good way).

If Bernie Sanders improbably gets the Democratic nomination, he might well defeat Trump and the Democratic Party would have to change. But that would be in ways that he's already begun forcing it to change. Bernie, however, isn't an Establishment guy, and the Democratic power brokers have moved to repel his assault on their ramparts. We have an odd election cycle--the Democrats indulge in machine politics, where might makes right. The Republicans, much to their consternation, have become democratic, with voters imposing their will on the power structure. The establishments of both parties should be reflecting on their shortcomings. But don't expect them to instigate change on their own. That will have to be forced on them by the electorate.

Donald Trump will now surely be the Republican nominee. He has displayed remarkable political talent, and has blasted his way through a vast field of experienced, well-funded and strongly supported career Republican politicians. Hillary Clinton's negatives and baggage offer Trump big, fat, juicy targets. With his skill at handling the media, he may well close the 8-9% gap between himself and Clinton and force her into an extremely tight race. Bernie Sanders, by contrast, with his humble background, modest finances, and rumpled clothes, presents a harder target to hit. There aren't that many cheap shots Trump could take at him. Trump would have to attack Sanders' policy proposals and platform--and that's exactly where Sanders would like the debate to be. By relentlessly pushing his ideas, Sanders closed an enormous gap between himself and Clinton. He's won with his ideas and his victory today in Indiana shows his continued appeal to voters.

Contrary to what many self-satisfied Democratic insiders believed this morning, the Republicans will not tear their party apart. Trump has the rest of the Spring and the Summer to stitch together a united Republican front. Sanders, having just won Indiana and likely to win more upcoming primaries, isn't stepping out of the race. The Democrats face a dilemma: whether to nominate Clinton, the candidate with the most power within the party, or nominate Sanders, the candidate most likely to beat Trump. Power politics will probably prevail. But in choosing Clinton, the Democrats may be taking the harder road to the White House.

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